ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Stagflation is a stagnant economy combined with high inflation. Stagflation amounts to a killer combination and can result in an economic downturn in which bills and the cost of living keep rising.

Detailed explanation-2: -The Great Inflation has taught economists that stagflation can occur for two reasons: poor economic policies and price increases in energy sources. Both of these things can happen independently or at the same time and reinforce each other, thus spurring stagflation.

Detailed explanation-3: -Global stagflation could severely affect the growth outlook for emerging and developing countries which are dependent on external demand and supply. A sharp slowdown or recession in the US and the Eurozone would lead to lower demand for exports from China, undermining the country’s economic activities and growth.

Detailed explanation-4: -Stagflation is an economic condition that’s caused by a combination of slow economic growth, high unemployment, and rising prices. Stagflation occurred in the 1970s as a result of monetary and fiscal policies and an oil embargo.